HK Stock Market Move | Gold stocks continue to be under pressure, with high US CPI suggesting that inflationary pressures cannot be ignored, and the situation in the Middle East continues to deteriorate.

Gold stocks continue to be under pressure. As of the time of publication, Zijin Gold Intl (02259) fell by 3.87% to 99.3 Hong Kong dollars; Zijin Mining Group (02899) fell by 2.96% to 28.84 Hong Kong dollars; Chifeng Jilong Gold Mining (06693) fell by 2.24% to 24.4 Hong Kong dollars; Shandong Gold Mining (01787) fell by 2.09% to 20.64 Hong Kong dollars. On the news front, the latest inflation data for May released by the United States last night showed that CPI rose by 4.2% year-on-year, while core CPI rose by 2.9% year-on-year, both in line with market expectations. CITIC Futures believes that for gold, the impact of this data is not simply bullish or bearish: high overall CPI means inflationary pressures are still significant and the conditions for the Fed to ease are lacking; while the cooling of core inflation on a month-on-month basis eases market concerns about short-term rate hikes, allowing gold to recover from its rapid decline. In the short term, gold may remain in a low-level volatility, with the cooling of core inflation helping to ease short-term selling pressures, but with high overall inflation and real interest rates slow to fall, the upside is still limited. It is worth noting that the geopolitical situation has taken a sharp turn as the US military confirmed a second consecutive day of strikes on Iran, with Iranian military forces closing the Strait of Hormuz and prohibiting any vessel passage. Spot gold has now fallen below the $4100 per ounce mark and has wiped out all gains for the year. Citibank's latest report predicts that if the blockage of the Strait of Hormuz continues into the summer, global gold purchasing demand may further shrink, and gold prices could fall to $3500 per ounce by September. Currently, Citibank has lowered its target price for three-month gold from $4300 per ounce to $4000 per ounce.